Why is everyone going mental about zero-hours contracts?

Sanity needed.

Last week’s revelations about the extent of the use of zero-hours contracts in the UK caused an almighty uproar in the national press and only a minority of commentators made anything that could be described as a measured response. The government’s reaction, that it "would examine" the issue, is the correct one. Zero-hours contracts do need to be examined and managed more effectively, but they certainly ought not to be banned, as several commentators suggested last week.

Even those commentators most hardened against the idea of zero-hours contracts did concede that there were some situations in which their use was appropriate. Indeed, it’s hard to see how some industries could operate without at least some use of zero-hours contracts. At an outdoor tourist attraction, for example, a good weather forecast could see a fivefold increase in custom, but staffing in accordance with that maximum capacity would be prohibitively expensive. However, that is not to say that there is no problem, and it is not just the government which needs to examine how these contracts are used. Employers too, need to look at how they implement zero-hours contracts. If their use is as widespread as is claimed, then any abuse of them has the potential to have a perceptible impact on the economy as a whole.

The most serious issue is that of employers discriminating against workers who refuse hours offered by their manager. There’s been no real investigation of how widespread that practice is, but no sensible businessperson could justify such behaviour. Unless there is a real shortage of staff, the only inconvenience caused by an employee turning down hours is that of sending another text, or making another phone call to find a replacement. That infinitesimal saving in time certainly doesn’t make up for the negative impact of instilling anxiety and resentment in a business’s staff.

That impact will soon translate to an actual cost. From a purely financial perspective, increasing the use of zero-hours contracts may initially appear to, but using them inappropriately can have a real impact on the quality of a business’s customer service. Customer service representatives are the face of the company, and employees who begrudge the way they are treated by their employer are unlikely to make that face a very pretty one. A worker who is stressed or unprepared for work will not perform to the best of their ability, and that is the inevitable consequence of using a zero-hours contract where a full-time arrangement is more suitable. If managers feel that they need to pressure employees into accepting hours, then that is a fair indication that that is what is going on.

In many cases, it’s possible that the over-use of zero-hours contracts has come about as a reaction to worries about fluctuations in productivity and custom, thinning operating margins, and anxieties about staffing in response to these changes. It may even be down to a lack of skill amongst managers in scheduling staff appropriately. However, the technology that can be used to predict activity levels within a workplace, to schedule staff and to monitor productivity is now so advanced that such an unscientific and potentially damaging approach really ought to be a thing of the past.

Human error can be significant, and most managers have better things to do with their time than work out staffing rotas, but an automated approach leaves the manager free to work on improving the performance of their team, and identifying the training needs and potential of their staff. All of these processes can now be aided by software, and using such technology makes it immeasurably easier to accommodate different contract types within the organisation. This reduces anxieties about demand and capacity, and should make it less of a temptation for managers to over-use the zero-hours contract.

If last week’s furore demonstrated anything, it’s that clearer thinking is necessary when we consider an employer’s obligation towards their employees’ financial stability. An economy balanced towards the service industry will always require a high degree of flexibility. However, business leaders should not lose sight of the importance of employee engagement, and the impact that good morale can have on service quality. The argument against the over-use of zero-hours contracts is founded on business sense as much as upon ethics. The good news is that the technology exists to balance those obligations against the imperatives of fluctuating demand - government should do more to encourage its use.